The music industry generated 4 trillion streams in 2023 — a 157% increase from 2019. That’s not a trend. That’s a structural transformation of how the world monetizes recorded music, and it has created one of the most compelling investment backdrops for royalty assets in history.
Understanding streaming’s mechanics — how money flows, who captures what, and why royalty valuations have expanded so dramatically — is essential context for any investor evaluating music IP as an asset class.
How Streaming Revenue Actually Flows
When someone plays a song on Spotify, a fraction of that platform’s monthly subscription revenue is allocated to that play — based on a complex weighted formula that divides the total royalty pool by total plays. This is the pro-rata streaming model, and it means that the more popular a song is relative to total platform plays, the more its rights holders earn.
The royalty flow has multiple recipients:
- Master recording owner (typically a label or, increasingly, the artist or catalog fund): receives the largest share, typically 50–75% of streaming royalties for the recording
- Songwriter/publisher (publishing royalties): typically 15–25% via PROs (ASCAP, BMI, SESAC) and direct deals
- Performing artist (if separate from master owner): receives a percentage per their contract
For a catalog fund, the investment thesis is to own the master recordings or publishing rights (or both) so that royalties flow directly to the fund with minimal overhead.
The Multi-Platform Diversification Advantage
One of streaming’s most important characteristics for royalty investors is platform diversification. Revenue no longer comes from a single CD manufacturer or radio network. It comes from:
- Spotify: ~220M paying subscribers globally
- Apple Music: ~90M paid subscribers
- YouTube Music: ~100M paid subscribers
- Amazon Music: ~90M paid subscribers
- Tidal, Deezer, and regional platforms: millions of additional subscribers
- TikTok: licensing deals creating new royalty streams from short-form content
No single platform has a lock on the market. If Spotify changes its royalty model, other platforms absorb the displaced listening. If one platform bans an artist, others continue to pay. This diversification structurally reduces royalty income risk in a way that the old radio or physical distribution model never could.
Streaming Growth Is Not Stopping
The compelling aspect of streaming’s growth trajectory is that global subscriber penetration remains relatively low. Luminate projects continued double-digit growth in streaming revenue as emerging markets — Southeast Asia, India, Latin America, Africa — add hundreds of millions of new paid subscribers over the next decade.
Goldman Sachs’ updated “Music in the Air” analysis projects the recorded music segment to grow to $81 billion by 2030 (from $37 billion in 2019). Publishing grows from $12B to $39B. These aren’t incremental increases — they represent a doubling and tripling of the income base that royalty catalog valuations are built on.
For a catalog acquired at 12x royalties today, if those royalties double over the next decade (consistent with Goldman’s projections), the catalog’s income-adjusted value has effectively increased significantly — independent of any multiple expansion.
What This Means for Catalog Valuations
Premium music catalogs have historically traded at 6–12x annual royalties. As streaming has demonstrated the stability and growth potential of those royalties, multiples have expanded significantly:
- Tier 1 catalogs (iconic, globally recognized): 20–25x royalties
- Tier 2 catalogs (established artists, strong streaming numbers): 12–18x
- Tier 3 catalogs (mid-market, consistent but not culturally dominant): 6–12x
BARS Fund targets primarily Tier 2 and Tier 3 catalogs — where entry multiples are reasonable, streaming fundamentals are strong, and the competitive bidding dynamics are less intense than at the top of the market.
The Income Floor Nobody Is Talking About
The most important risk-management feature of music royalties for Bitcoin treasury purposes isn’t the appreciation — it’s the income floor.
Music royalties are earned whether Bitcoin goes up or down. During Bitcoin’s 64% drawdown in 2022, a royalty catalog continued generating income. That income, deployed to service the debt that funded Bitcoin purchases, meant a BARS Fund investor’s position wasn’t distressed — the carry was covered regardless of Bitcoin’s short-term price action.
This is the structural advantage that separates our model from every pure Bitcoin treasury play: the income doesn’t stop when the market gets difficult.
Further reading: Goldman Sachs Music Revenues Forecast to $200B by 2035
Erik Mendelson is the founder and CEO of BARS Fund. Contact: erik@recordgram.com